Few would contest the idea that innovation is essential to the payments industry, where speed and simplicity have long been distinguishing characteristics. Today, however, the focus is no longer solely on payment speed. From buyers to sellers, we all want to feel confident about the transaction, especially given the growing possibility of fraud brought on by the expansion of digital trade.
Escrow, a time-tested payment option, can be revitalized for the digital era when it comes to fostering confidence and fostering safer payments for purchases ranging from garments to used automobiles and watches.
Let's dive into the past
Escrow is a term that has been around for a while; it first appeared in the English language in 1590 and is derived from the Old French word escroue, which means a shred of paper (on which a deed or title was usually recorded to be held by a third party).
Given its antiquity, it's not surprising that escrow is frequently viewed by finance professionals as slow, difficult, and cumbersome - a holdover from trust funds and real estate transactions.
However, combining the concept of escrow with contemporary payment technology results in a sophisticated solution to the persistent issue of online fraud and money laundering.
The number of online scams reported to the National Cyber Security Centre (NCSC) last year was 2.7 million, which is four times more than in 2020. Challenger banks were criticized by the regulator just last month for not doing enough to lower the risks of fraud and money laundering.
In the meantime, customers are increasingly turning to markets for refurbished products and used goods and searching for a stronger assurance that their money is secure.
Additionally, marketplaces for anything from used automobiles to building supplies have turned into a sellers' market as a result of the disruption to manufacturing caused by the epidemic, Brexit, and other macroeconomic developments.
Customers will understandably be concerned about security and trust when such large quantities are involved. However, is it possible that a 16th century concept could elegantly answer all of these very 21st century issues?
The new age Digital Escrow
This new era of trust and the rising threat of online fraud in the e-commerce industry can be facilitated by holding funds in digital escrow as a basic component of the payment engine rather than an ad-hoc add-on for exceptional instances.
When making online transactions, customers can use escrow to ensure that their money won't be released until specific requirements are completed, protecting them from financial loss in the event that the seller's items are falsely promoted or fraudulently obtained.
Before they are obliged to transmit any items, sellers may relax knowing that a buyer has already completed the necessary identification and verification steps and transferred the purchase amount into the escrow service.
This is true for all types of escrow, but since rapid, real-time transactions are the norm for the payments sector, integrating digital escrow into a payments channel offers a straightforward, seamless solution.
This immediate norm is widely used, but if marketplaces wish to minimize risk, they need a trustworthy middleman to keep cash safely until the conditions for the buyer and seller have been met.
Although the advantages seem straightforward, it was unheard of until recently to think of escrow as an essential component of the payments engine.
Chief Payments Officers, Chief Technical Officers, or Chief Website Officers should all take note, whether it's about safeguarding transactions between buyers and sellers on marketplaces, building trust for high-value purchases, or offering a more elegant solution for time-sensitive transactions that require more than just straight-through processing.
Your company's solution to fraud-free payment channels may come from an outdated technology that has been modernized for the internet.
Summarizing the process
In digital escrow, a third-party account holds the money deposited by the buyer until the seller fulfills the terms of the contract. The escrow company supervises the transacting parties.
What is the role of Digital Escrow in preventing online fraud in India?
Digital escrow services are offered by many companies in India. Among the most trusted is Vouch.
Vouch’s Digital Escrow service is a transparent way for buyers and sellers to build trust and secure a clean transfer of product and payment. Sellers can feel assured that they will be fairly compensated promptly, and buyers will feel confident that their order will be delivered as expected and on schedule. Vouch Digital Escrow keeps you updated and informed at every step of the transaction process till the end. Vouch’s professionals are always available to assist you with all queries that you may have during the entire transaction process.
There is no scope for deceit or fraud since the payments, shipping, delivery, and execution are carried out under the honest and watchful eyes of the Vouch’s professionals. With Vouch, any business transaction becomes transparent, uncomplicated, and hassle-free. If you ever come across a fraudster asking for OTP, asking you to scan a QR code, or asking you to click on phishing links, you can simply refuse and ask him/her to proceed with the transaction through Vouch.
Check back here for more Blogs on how to avoid frauds
Safety is not just about protecting your credit, debit card number, and UPI accounts. It's about having control of your money till you've received the product or service you bought online!
Note: This is a good-faith initiative to educate the world about avoiding frauds like these and how to act when you're becoming a victim of such a situation.
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